Joe Biden is desperately casting about for a way to cancel student loan debt in order to boost his standing with younger voters and stave off a Democratic disaster at the polls. The current scuttlebutt is a plan that would forgive $10,000 in debt for borrowers who earn less than $125,000 a year.
But Biden’s radical allies won’t be satisfied with only partial forgiveness of the debt. They have been insisting that Biden has the power to cancel all $1.6 trillion worth of college debt currently on the books. About five million borrowers owing $110 billion are in default, up from 2.1 million owing $31 billion in 2013.
Democrats have made tweaks to the system that have made problems exponentially worse. And by far the most spectacularly stupid move was Joe Biden’s act of “suspending” student loan payments and interest during the pandemic and continuing to suspend the payments long after the entire nation had gone back to work. This will make it politically impossible to resume student loan repayments in the future.
Colluding with the Democrats on student loan forgiveness is Big Academia, which has jacked up the cost of going to college far beyond the rate of inflation in order to take advantage of the ever-expanding federal loan programs that have ensnared millions of young people and saddled them with debt they can never repay.
As the loan limit increased over time—now $57,500 a year for independent undergrads and $31,000 for those dependent on their parents—colleges raised their prices to sop up more federal largesse. It doesn’t matter to the schools if their philosophy grads work as baristas.
In 2010 Democrats nationalized the student loan market, eliminating guarantee fees for private lenders and using the “savings” to pay for ObamaCare. They also created income-based repayment plans, allowing future borrowers to limit monthly payments to 10% of their discretionary income and discharge their remaining debt after 10 to 20 years.
The Obama Administration expanded these plans to older borrowers. Democrats claimed the plans would reduce defaults and the cost of the loan program. They didn’t. About five million borrowers owing $110 billion are in default, up from 2.1 million owing $31 billion in 2013. Fewer than half of borrowers were even paying down loans before the pandemic.
About 8% of borrowers account for 40% of the $1.6 trillion in federal student debt. A lot of that debt is from those who attended graduate school and are now pulling down six figures a year.
Why should their debt be forgiven?
“There’s different proposals floating around the administration about how to structure this,” said one person involved in the discussions, who spoke on the condition of anonymity to reflect private conversations. “Over the course of the past week especially, administration and congressional staff have focused the conversation on debt cancellation on how to best meet the president’s desire to ensure the most economically vulnerable people with student debt benefit from any action.”
Biden’s authority to cancel student loans rests with a dubious interpretation of his powers from the Higher Education Act of 1965, which radicals say grants the President sweeping authority to “compromise” or “modify” student loans. But the Education Act is an act of Congress, and only Congress should be able to amend the terms of the loans.
Biden knows this, which is why he’s hesitating to use his executive authority in this case. A little thing like the Constitution of the United States won’t stop the left, so in the end, Biden may give in and end student debt anyway
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